We will provide clients shortly with a detailed analysis of the new capital standards proposed yesterday by the banking agencies. But, our initial read of the new mortgage requirements makes clear that banking agencies are more than a bit put out about any but the most gold-plated of residential mortgages, especially HLTV ones, on bank portfolios. Given all the other rules in the works (risk retention among them) that squash securitization, we aren’t at all sure how banks will do much mortgage origination, securitization or investing outside the government or GSEs – more than a modest impediment to the rebirth of the private market regulators keep saying they want to encourage.

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